Apple expectations grow with new event on tap

SAN FRANCISCO (MarketWatch) -- The long-anticipated upgrade to Apple Computer Inc.'s iPod is likely to be one step closer to reality, with the company sending a typically cryptic invitation to an event next week in San Francisco.

Apple
AAPL, -1.53%
emailed invitations Tuesday to the Sept. 12 event, with the notice proclaiming "It's showtime" and with the Apple logo set against a background of spotlights. Based on past Apple invitations and events, the invite probably gives more than a little hint about what the company has in store for its upcoming gathering.

Industry analysts and watchers have come out recently saying that Apple is likely to unveil a new version of its iPod nano player that will come with an increase in memory beyond its current 4-gigabyte maximum level. There also has been speculation that Apple has reached agreements with several major film studios to begin selling movies online through the company's iTunes store.

Apple spokesman Steve Dowling had no comment about what the company will showcase at the event, but the company's invitation suggests that it's something involving movies. Apple shares rose $3.10, or 4.5%, to close at $71.48 as word of the event became public.

The iPod line hasn't been upgraded since last September, when Apple rolled out the nano and new iPods capable of playing music videos. Since then, the company has added more than 9,000 music videos for sale, as well as episodes of more than 200 television shows to go along with its library of at least 3 million songs.

Apple says that it has sold more than 35 million videos since launching the service a year ago. Customers can currently download videos and TV shows for $1.99 each, and songs for 99 cents.

But selling movies online is seen by many technology executives to be the holy grail of downloadable entertainment, as it is considered the main conduit by which computer companies can move into the consumer living room and alter the landscape of the home-entertainment market.

Apple has made some tentative steps in that direction with its Mac mini, a computer that comes without a screen or keyboard, and which Apple has positioned as a device by which consumers and use to manage, watch and listen to all of their digital content over their home televisions.

Michael Greeson of the Diffusion Group, a Plano, Texas-based research firm, said that any new Apple announcements regarding the movie downloads only scratch the surface of what the company is trying to accomplish.

"There is no doubt Apple is aiming for the living room," he added. "Given Apple's success in music and video downloads, extending this model to full-length movies makes sense."

In addition to talk of new iPods and movie downloads, anticipation has grown surrounding the possibility that Apple might introduce its own mobile phone with built-in iTunes capabilities. Apple has been involved in mobile phones to a small degree, licensing its technology to Motorola Inc.
MSI, -0.07%
for use in its Rokr and Slvr phones.

However, Apple hasn't done a mobile phone on its own or co-branded with another partner. Shaw Wu, an analyst with American Technology Research, said there is evidence that Apple has been working on cell-phone technology for several years, and that while the company faces several hurdles in breaking into the cell-phone market -- either on its own or with a partner, due to competition and regulatory approval -- Apple appears ready to soon enter the cell-phone sector.

"We believe [Chief Executive] Steve Jobs is finally satisfied with the end product," Wu wrote in a research note, saying that Apple engineers have likely managed to meet Jobs' expectation for product technology and design. "Given his previous record of very high standards, [we think] that this will be no exception."

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